Chances of a positive DB to DC transfer recommendation?

Miiade

Hi All,

I would appreciate any advice on what the chances are of getting a positive transfer in the following scenario. I realise no one can give a definitive answer, but for those in the industry or for those that know the process, opinions would be appreciated.

Pension 1 NRA 60.  (cpi linked, spouse 50% on death)

£1486    Cetv offered £70.2k

Pension 2 NRA 65 (cpi linked, spouse 50%)
£1662   Cetv offered 68.8k

I have another DB deferred pension that is forecast to pay £12.5k at 60, with around 50k avc lump sum. 

My initial plan was to draw all pensions at 60 and take a 25% reduction on pension 2, giving me around £15k DB pension income a year. However looking at the cetv values i would like to add these to my DC pot and retire around age 56/57. (ni paid up). Current age 51.

I estimate my DC pot should be around 170k at this age. With the above cetv transfers the pot would be around 300k. Would draw 25% tax free and the rest down between 56 to sp at 67/68.  I also have gross rental income of around 20k a year and £200k in share isa. Total mortgage debt is 99k, with 19 years left.

My partner (not married but plan to) is 37, has 5 years NI and a DC pot of about 20k. Works part time and earns 10k and would probably continue working until I was about 60, we have no kids. My attitude to risk is high and I need about 3k a month net retirement income.

Do people think I have a chance of getting a positive recommendation before I start the above process or would it almost certainly be a no.

If I’ve left any info out just ask

Many thanks.

Albermarle

How old are you ?
My understanding is that below a certain age , you will struggle to even get an IFA to look at your situation for a BB transfer , never mind give a positive recommendation.

Miiade

51 just added this to first post.

tacpot12

I think that currently there is zero chance of you getting a positive recommendation. Your plan is reasonable, but it has no guarantees, and IFAs have been warned off allowing sensible people to do reasonable things with their own money by the FCA.

The FCAs stance on pension transfers is not in the spirit of the pension freedoms that we have supposedly been granted by Parliament. I would write to your MP to ask that the FCA be forced to change its stance so that it aligns with the law. 

Miiade

Thanks tacpot for the comments.

Are there any IFAs on here who have knowledge of the process and have an opinion on my chances.

Pat38493

Hi - do I understand from this thread that you are not allowed to transfer your DB benefits into a DC scheme unless you have a positive recommendation to do so from an approved financial advisor?  

If so I agree that's a bit strange - surely it should be that you have to prove that you have taken advice from one, but the final choice should be your own?

Albermarle

Pat38493 said:

Hi - do I understand from this thread that you are not allowed to transfer your DB benefits into a DC scheme unless you have a positive recommendation to do so from an approved financial advisor?  

If so I agree that's a bit strange - surely it should be that you have to prove that you have taken advice from one, but the final choice should be your own?

As discussed in numerous threads . Legally all you have to do is to have taken the advice , so in theory you can still transfer with a negative recommendation . Finding a pension provider who will accept you as an 'insistent client ' is the problem .
There used to be a couple , but they have closed the doors. They are worried about litigation down the line, when the transfer does not work out so have taken a business decision not to get involved.
Apparently there are one or two? smaller providers via an IFA that still accept these transfers.
If you have a positive recommendation then no problems .

Marcon

Miiade said:

Hi All,

I would appreciate any advice on what the chances are of getting a positive transfer in the following scenario. I realise no one can give a definitive answer, but for those in the industry or for those that know the process, opinions would be appreciated.

Pension 1 NRA 60.  (cpi linked, spouse 50% on death)

£1486    Cetv offered £70.2k

Pension 2 NRA 65 (cpi linked, spouse 50%)
£1662   Cetv offered 68.8k

I have another DB deferred pension that is forecast to pay £12.5k at 60, with around 50k avc lump sum. 

My initial plan was to draw all pensions at 60 and take a 25% reduction on pension 2, giving me around £15k DB pension income a year. However looking at the cetv values i would like to add these to my DC pot and retire around age 56/57. (ni paid up). Current age 51.

I estimate my DC pot should be around 170k at this age. With the above cetv transfers the pot would be around 300k. Would draw 25% tax free and the rest down between 56 to sp at 67/68.  I also have gross rental income of around 20k a year and £200k in share isa. Total mortgage debt is 99k, with 19 years left.

My partner (not married but plan to) is 37, has 5 years NI and a DC pot of about 20k. Works part time and earns 10k and would probably continue working until I was about 60, we have no kids. My attitude to risk is high and I need about 3k a month net retirement income.

Do people think I have a chance of getting a positive recommendation before I start the above process or would it almost certainly be a no.

If I’ve left any info out just ask

Many thanks.

Your proposed spouse is more than 10 years younger than you are. Have you checked if either DB scheme reduces the spouse's pension because of this? You need to ask the administrators of each scheme the specific question, because scheme booklets and benefit statements often cheerfully omit this rather important piece of information.

xylophone

Apparently there are one or two? smaller providers via an IFA that still accept these transfers.

https://forums.moneysavingexpert.com/discussion/comment/78912402/#Comment_78912402

Pablo7474

At the moment I see no chance of getting a positive recommendation. If you wait until 55+ there is more chance but still pretty low. 

You have a good mix of DB and DC, you should see the benefits in this.. 

xylophone

Your proposed spouse is more than 10 years younger than you are. Have you checked if either DB scheme reduces the spouse's pension because of this?

https://www.saga.co.uk/magazine/money/retirement/pensions/dispelling-pension-myths

My second wife is 15 years younger than me, and I have heard she may not qualify for full final salary pension scheme benefits when I die. Is this true?

Most company final salary pension schemes continue to pay income to a surviving spouse after the policyholder dies, typically at 50%. This also applies where people have remarried, but the income may be reduced where the spouse is much younger. If the main policyholder dies, the scheme’s actuary will usually apply a formula that reduces the pension payment where there is a large age gap, in order to reduce the burden on the scheme. This is known as the ‘young spouse’s reduction’, and typically cuts income paid to a surviving husband or wife by 2.5% for each year in age difference beyond ten years.

The larger the gap, the less pension the surviving spouse is initially likely to get, although it should be paid for longer due to their higher life expectancy. One option is to transfer the final salary pension scheme into a ‘money purchase’ pension, giving you greater control, but financial advice is essential.

https://www.pensions-ombudsman.org.uk/sites/default/files/decisions/PO-20826.pdf